U.S. Agriculture in Vietnam

Trans-Pacific Partnership: New Opportunities for U.S. Agriculture in Vietnam

Secretary Vilsack traveled to Vietnam to meet with his counterparts from the Ministry of Agriculture and Rural Development and the Ministry of Industry and Trade, among others, to discuss the details of the Trans-Pacific Partnership (TPP) agreement.

Vietnam remains one of the fastest-growing markets for U.S. food and agricultural products, with U.S. exports totaling $2.3 billion in 2015. That’s a 357 percent increase from 2007, the year Vietnam joined the World Trade Organization (WTO). Vietnam now ranks as the United States’ 11th-largest agricultural export market, with top products including cotton, tree nuts, soybeans, and dairy.

Vietnam is a member of the ASEAN Free Trade Zone and has concluded free trade agreements with a number of other countries, including key U.S. competitors such as Australia, Chile, Korea, and New Zealand. In addition to being part of the TPP, Vietnam is in the process of negotiating agreements with China, the European Union, Hong Kong, and Israel. In these negotiations, Vietnam has agreed to tariff reductions on many agricultural products, potentially putting U.S. exporters at a disadvantage.

Vietnam’s average tariff on agricultural products is 16 percent, while the average U.S. tariff is five percent. Under the TPP, Vietnam will reduce and eventually eliminate tariffs across a broad range of food and agricultural products, helping put U.S. exports on a level playing field and giving the United States a leg up on non-TPP competitors. In addition to addressing tariffs, the TPP agreement also addresses non-tariff trade barriers, including sanitary and phytosanitary measures.

Beef: The United States exported $32.3 million of beef and beef products to Vietnam in 2015. Under the TPP agreement, all of Vietnam’s tariffs on beef and beef products, currently as high as 34 percent, will be eliminated in 3-8 years. Tariffs on fresh and frozen beef muscle cuts will be eliminated in three years.

Dairy: In 2015, the United States exported $168 million of dairy products to Vietnam, more than three times the value a decade ago. All of Vietnam’s tariffs on dairy products, currently as high as 20 percent, will be eliminated within five years. Tariffs on cheese, milk powder, and whey will be eliminated immediately.

Pork: The United States exported $3.8 million of pork and pork products to Vietnam in 2015. As a large consumer of pork, Vietnam provides significant potential for U.S. exporters. Under the TPP agreement, Vietnam will eliminate tariffs on pork and pork products, currently as high as 30 percent, in 5-10 years. Tariffs on frozen cuts and shoulders will be eliminated in eight years and on preserved pork, fresh pork cuts and shoulders, and fresh and frozen carcasses in 10 years.

Poultry and Eggs: The United States exported nearly $100 million of poultry and poultry products to Vietnam in 2015. Vietnam’s tariffs on poultry and poultry meat, currently as high as 40 percent, will be eliminated within 13 years. This includes tariffs on frozen chicken cuts and offal, which will be eliminated in 11 years. Vietnam will eliminate in-quota tariffs for eggs within its WTO tariff-rate quota (TRQ) in six years. According to Vietnam’s WTO commitments, this TRQ will continue to grow in perpetuity by five percent per year.

Horticultural Products

Fruit: The United States exported $58.6 million in fresh fruit to Vietnam in 2015. Under the TPP agreement, Vietnam’s tariffs on fresh fruits, which are currently as high as 30 percent, will be eliminated within four years.

The United States exported $24.2 million of processed fruit products, including juices, to Vietnam in 2015. Under the TPP agreement, Vietnam’s tariffs on processed fruit products, currently as high as 40 percent, will be eliminated within eight years.

Tree Nuts: The United States exported more than $274 million of tree nuts to Vietnam in 2015. Vietnam’s tariffs on tree nuts, currently as high as 35 percent, will be eliminated in 3-6 years.

Vegetables and Pulses: The United States exported $4 million of fresh and processed vegetables (excluding potatoes) to Vietnam in 2015. Vietnam will eliminate tariffs on all fresh and processed vegetables, currently as high as 40 percent, in 11 years or less, with tariffs on many products eliminated immediately.

Potatoes: The United States exported $5.1 million of potatoes and potato products to Vietnam in 2015. Under the TPP agreement, Vietnam will eliminate tariffs on all potatoes and potato products, currently as high as 34 percent, within six years. It will eliminate the 13-percent tariff on frozen French fries in four years.

Grains and Oilseeds

Barley: The United States did not export barley to Vietnam in 2015. Under the TPP agreement, Vietnam’s tariff on barley will be locked in at zero percent and its 15-percent tariff on milled barley will be eliminated in four years.

Corn: The United States exported $190 million of corn and corn products to Vietnam in 2015. Under the TPP, all of Vietnam’s tariffs on corn and corn products, currently as high as 30 percent, will be eliminated in 4-7 years.

Peanuts: The United States exported $24 million of peanuts and peanut products to Vietnam in 2015. Under the TPP agreement, Vietnam’s tariffs on peanuts and peanut products, currently as high as 30 percent, will be eliminated within eight years.

Rice: The United States exported $140,000 of rice and rice products to Vietnam in 2015. Under the TPP, Vietnam will immediately eliminate its current 40-percent tariff on rice and will eliminate tariffs on rice products, currently as high as 35 percent, within eight years.

Soybeans: The United States exported more than $407 million of soybeans and soybean products to Vietnam in 2015. The current duty-free access for soybeans will continue under the TPP. Vietnam’s tariffs on soybean products, currently as high as 33 percent, will be eliminated in 3-11 years.

Wheat: The United States exported roughly $67 million of wheat and wheat products to Vietnam in 2015. Vietnam’s tariffs on wheat and wheat products, currently as high as 35 percent, will be eliminated within four years.

Other Products

Cotton: Vietnam was the United States’ second-largest cotton market in 2015, with exports reaching a record $624 million. Vietnam’s large and growing textiles industry offers significant opportunities for U.S. cotton exporters. Under the TPP agreement, all of Vietnam’s tariffs on cotton, currently as high as 10 percent, will be eliminated within four years.

Processed Food: In 2015, the United States exported $467 million of processed food to Vietnam. Under the TPP agreement, nearly all of Vietnam’s tariffs on processed products, currently as high as 55 percent, will be eliminated within 12 years. Tariffs on products such as cookies, crackers, biscuits, breads, and starches will be eliminated in eight years.

Tobacco: Vietnam will eliminate all tariffs on tobacco, which are currently as high as 135 percent. For manufactured tobacco products, Vietnam will eliminate tariffs in 16 years. For un-manufactured tobacco, Vietnam will create a 500-ton transitional tariff rate quota (TRQ) that will grow by five percent each year, with in-quota tariff rates eliminated in 11 years and out-of-quota tariff rates eliminated in 21 years.